Section 5.27 Other Insurance

• Library: Insurance Practice 2015

Often, more than one liability policy applies to the same accident. The purpose of the “other insurance” provision is to determine the obligation of the company under such circumstances and, to the extent possible, limit its liability to the part of the loss that it agreed to assume. The Shelter A-20-A policy states:

[W]e shall not be liable under this policy for a greater proportion of the loss than the limit of liability under this policy for the loss bears to the total limit of liability of all valid and collectible insurance against the loss. However, the insurance under COVERAGES A and B of this policy for a temporary substitute auto or a non-owned auto shall be excess insurance over any other valid and collectible insurance . . . .

An old “axiom” often referred to by insurance professionals and attorneys who work in the area of auto policy coverage is that “the insurance on the car is primary” or “the insurance follows the car.” That “axiom” should be abandoned because it promotes an erroneous concept—that all companies use the same “other insurance” provisions in the liability sections of their policies. In fact, they do not. To determine the priority, or order of payment, reference should be made to the policy language of both policies at issue. For a good discussion of Missouri law relating to primary/excess coverages, see Planet Insurance Co. v. Ertz, 920 S.W.2d 591 (Mo. App. W.D. 1996).

Perhaps the most common use of the...